The Trump administration’s “affordable alternative” to the Affordable Care Act (ACA) is short-term health plans, but a new Kaiser Family Foundation (KFF) study published on Monday shows just how bare-bones this coverage actually is.
A KFF review of short-term health plans offered on two large private insurance websites, eHealth and Agile Health Insurance, in 45 states and Washington, D.C. shows these plans rarely if at all pay for essential coverage: no plans cover maternity care; 43 percent do not cover mental health services; 62 percent do not cover substance use disorder treatment (both alcohol and other drugs); and 71 percent do not cover outpatient prescription drugs.
— Kaiser Family Foundation (@KaiserFamFound) April 23, 2018
KFF found that seven states — Alaska, California, Hawaii, Maryland, Montana, New Mexico, and Utah — did not cover any of the four aforementioned benefits. In five states, short-term plans aren’t offered on these websites, primary because of state laws that regulate these plans.
The country is current facing multiple public health crises, including the worst rate of maternal deaths in the developed world and the deadliest drug epidemic in U.S. history. And short-term health plans, a favorite GOP policy, could exacerbate this. As HuffPost’s Jeffrey Young writes, “The Republican Party’s brightest idea for how to fix [the health care system]? Make health insurance worse — is to free up access to insurance that does not cover maternity care and hardly covers addiction or mental health services.”
Short-term plans have been around for a long time and predate the ACA. These plans aren’t meant to be a long-term insurance option, but simply cover gaps between coverage — like for a person in between jobs, waiting for health benefits to kick in.
In February, the White House released a proposal to permit people to purchase these plans for up to 364 days, rather than the current three-month limit. The Department of Health and Human Services (HHS) is also requesting comment on whether to make these plans renewable. The comment period for this proposed rule ends Monday.
With the requirement that individuals have ACA-compliant health plans or face a tax penalty gone starting in 2019, it’s possible more people will purchase short-term plans, says KFF. The Trump administration told reporters that anywhere between 100,000 to 200,000 people would desert ACA-compliant plans for short-term health plans, but most experts believe this is a conservative estimate. The Urban Institute estimates 4.3 million people will purchase short-term plans next year, with more than half (2.7 million) abandoning comprehensive health plans.
The Trump administration argues that these plans provide people a more affordable option — but this only accounts for monthly premiums. While premiums for short-term plans are cheaper than the cheapest ACA plan (priced at 20 percent or less), this isn’t the only insurance expense — and short-term plans don’t protect consumers from extremely high cost sharing costs. There isn’t a set out-of-pocket limit; meaning, cost sharing in a short-term plan can be, for example, effectively capped at $20,000 per person compared to an ACA-mandated cap of $7,350. This is particularly concerning given the lack of benefits covered in short-term health plans.
Short-term plans could be harmful for people purchasing this coverage, and bad for those left on the ACA marketplace, as exits — particularly from those who are healthy — could drive up costs for those left on the exchanges. America’s Health Insurance Plans, an insurer lobbying group, warned against loosening regulations around skimpy plans for this reason on Monday, saying in a letter to HHS they will destabilize the markets.